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African Monetary Unions - Dominated by the North? On the Relevance of Rational Economic Reasoning Under African Conditions

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  • Kohnert, Dirk

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ABSTRACT & RÉSUMÉ: - Monetary coordination is high on the agenda of different regional organizations in Africa. Economic benefits of a common currency, like lower transaction cost, increased macroeconomic stability, or the shielding of central banks against political pressure from nationalist elites and their inclination for excessive spending are undoubtedly expected. But the most important underlying aim of monetary integration in Africa is derived from its history, particularly the legacy of the slave trade and colonialism, and the subsequent strive for pan-African ideals, which has become manifest in the promotion of African unity in a crisis prone continent. However, whether it is feasible to achieve this ambitious political aim with economic means of regional economic and monetary cooperation, is open to question. Experts and the international donor community periodically caution about diverting attention from the most pressing needs of African countries by pursuing over-ambitious monetary policies. African governments should get the priorities right, i.e. they ought to implement first sustainable solutions to the problems of crisis resolution and prevention, the fight against corruption and rent-seeking elites, in order to promote good governance, transparency and accountability. The realities of African economies suggest that the grand new projects of monetary unions are unlikely to succeed. In addition, it is questionable whether economic, result-orientated reasoning and the discussion of monetary concepts (e.g. that of the Optimum Currency Area or of the Original Sin), which might be duly applied to Western or Latin American societies, have the same relevance in the African context.---------------------------------------------------------------------------------------------------------------------------------------------------------- RÉSUMé: [Les unions monétaires - dominé par le Nord? La zone CFA et l'AMC - Sur la pertinence du raisonnement économique rationnel dans des conditions africaines] - La coordination monétaire est élevé sur l'ordre du jour des différentes organisations régionales en Afrique. Les avantages économiques d'une monnaie commune, comme un moindre coût de la transaction, l'augmentation de la stabilité macroéconomique, ou le blindage des banques centrales contre la pression politique des élites nationalistes et leur penchant pour les dépenses excessives sont sans aucun doute attendus. Mais l'objectif sous-jacent le plus important de l'intégration monétaire en Afrique est dérivé de son histoire, en particulier l'héritage de la traite des esclaves et le colonialisme, et la subséquente lutte pour les idéaux panafricains, qui est devenu manifeste dans la promotion de l'unité africaine. Cependant, si il est possible d'atteindre cet objectif politique ambitieux avec des moyens économiques de la coopération économique et monétaire régionale, est ouvert à la question. Les experts et la communauté internationale des donateurs en garde périodiquement de détourner l'attention des besoins les plus pressants des pays africains en poursuivant trop ambitieux politiques monétaires. Les gouvernements africains devraient obtenir les bonnes priorités, à savoir qu'ils doivent mettre en œuvre des solutions durables aux problèmes de la résolution des crises, la lutte contre la corruption et la recherche de rente par les élites, afin de promouvoir la bonne gouvernance, la transparence et la reddition de comptes. Les réalités des économies africaines suggèrent que les grands nouveaux projets de unions monétaires ont peu de chances de réussir. En outre, il est douteux que, un raisonnement économiste orienté vers les résultat et la discussion des concepts monétaires (par exemple celle de la zone monétaire optimale ou du Péché Originel), ce qui pourrait être dûment appliqué aux sociétés occidentales ou d'Amérique latine, ont la même pertinence dans le contexte africain.

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  • Kohnert, Dirk, 2005. "African Monetary Unions - Dominated by the North? On the Relevance of Rational Economic Reasoning Under African Conditions," MPRA Paper 82083, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:82083
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    References listed on IDEAS

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    1. Paul Masson & Catherine Pattillo, 2002. "Monetary Union in West Africa: An Agency of Restraint for Fiscal Policies?," Journal of African Economies, Centre for the Study of African Economies, vol. 11(3), pages 387-412, September.
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    5. Kohnert, Dirk, 2005. "Die UEMOA und die CFA-Zone: Eine neue Kooperations-Kultur im frankophonen Afrika?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 115-136.
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    9. Mr. Paul R Masson & Mr. Ousmane Dore, 2002. "Experience with Budgetary Convergence in the WAEMU," IMF Working Papers 2002/108, International Monetary Fund.
    10. Yeats, Alexander J., 1989. "Do African countries pay more for imports ?," Policy Research Working Paper Series 265, The World Bank.
    11. Devarajan, Shantayanan, 1997. "Real Exchange Rate Misalignment in the CFA Zone," Journal of African Economies, Centre for the Study of African Economies, vol. 6(1), pages 35-53, March.
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    1. Kohnert, Dirk, 2014. "Horse trading? EU-African Economic Partnership Agreements (EPAs)," MPRA Paper 57070, University Library of Munich, Germany, revised 02 Jul 2014.
    2. Kohnert, Dirk, 2008. "EU-African Economic Relations: Continuing Dominance, Traded for Aid?," MPRA Paper 9434, University Library of Munich, Germany.
    3. Kohnert, Dirk, 2022. "Domination française des marchés en Afrique francophone : Le post-colonialisme à son meilleur ? [French domination of Francophone African markets: Post-colonialism at its finest?]," MPRA Paper 112051, University Library of Munich, Germany.
    4. Kohnert, Dirk, 2019. "L'impact du Brexit sur l'Afrique francophone [The impact of Brexit on Francophone Africa]," MPRA Paper 94470, University Library of Munich, Germany.
    5. Kohnert, Dirk, 2022. "La Russie et la montée du terrorisme islamique en Afrique subsaharienne [Russia and the rise of Islamic terrorism in Sub-Saharan Africa]," MPRA Paper 113253, University Library of Munich, Germany.
    6. Dirk Kohnert, 2020. "The impact of Brexit on francophone Africa," Review of African Political Economy, Taylor & Francis Journals, vol. 46(162), pages 673-685, July.
    7. Dirk Kohnert, 2018. "Trump's tariff impact on Africa and the ambiguous role of African agency," Review of African Political Economy, Taylor & Francis Journals, vol. 45(157), pages 451-466, July.
    8. Kohnert, Dirk, 2019. "The impact of the EU-MERCOSUR deal on Africa in times of growing protectionism," MPRA Paper 95901, University Library of Munich, Germany.
    9. Kohnert, Dirk & Marfaing, Laurence, 2019. "Senegal: Presidential elections 2019 - The shining example of democratic transition immersed in muddy power-politics," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 53(2), pages 355-366.
    10. Kohnert, Dirk, 2022. "French domination of markets in Francophone Africa: Post-colonialism at its finest?," MPRA Paper 112024, University Library of Munich, Germany.
    11. Kohnert, Dirk, 2019. "L'impact de l'accord UE-MERCOSUR sur l'Afrique à l’heure de protectionnisme croissant [The impact of the EU-MERCOSUR deal on Africa in times of growing protectionism]," MPRA Paper 95926, University Library of Munich, Germany.
    12. Kohnert, Dirk, 2022. "Russia and the rise of Islamic terrorism in Sub-Saharan Africa," MPRA Paper 113618, University Library of Munich, Germany.

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    More about this item

    Keywords

    Sub-Saharan Africa; Franc CFA; CMA; optimal currency area; post-colonialism; France; South Africa; WAEMU;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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